Jammu & Kashmir Arbitration and Conciliation Act, 1997 – s.34 – Juridical seat of arbitration – Appellant engaged respondentcontractor for execution of road projects – Disputes between the parties regarding the contractual claims – Respondent invoked arbitration, and filed separate applications u/s.11 for the appointment of a sole arbitrator for each project – High Court appointed the former District and Sessions Judge as sole arbitrator – This Court, having regard to the value of the contracts, modified the High Court order and appointed former Judge of this Court as the sole arbitrator in substitution of the previously appointed arbitrator – Arbitral Tribunal, with the consent of the parties, fixed Srinagar as the seat of arbitration and New Delhi as the venue – Upon the demise of the sole arbitrator, the High Court appointed another former Judge of this Court, as the sole arbitrator to continue proceedings – Arbitral award delivered in New Delhi – Applications u/s.33 filed by appellant subsequently decided – Appellant then filed petition u/s.34 before the High Court seeking to set aside the arbitral award insofar as it related to Shahdra Project – Respondent raised preliminary objection regarding territorial jurisdiction – High Court returned the petition, holding that since the arbitration proceedings were conducted and the award was rendered at New Delhi, the courts at New Delhi alone had jurisdiction – Correctness:
Held: Not only have the parties expressly agreed upon Srinagar as seat of arbitration, but even the surrounding circumstances reinforce this – Contracts executed in the State of Jammu & Kashmir and the works were to be carried out within the said State – Arbitration proceedings were initiated in the State of Jammu and Kashmir and the High Court had appointed the arbitrator – These factors as well as the ‘closest and most intimate connection test’ unmistakably anchors the arbitration at Srinagar – Submission that arbitral award records New Delhi as place of arbitration and is thus, determinative of the seat cannot be accepted – Seat of arbitration is governed by the agreement of the parties and not by any stray recital in the award – Once the seat of arbitration is fixed, it remains immutable unless altered by an express agreement – In the absence of any agreement, the designation of Srinagar as seat of the arbitration continues to hold the field – High Court ought to have appreciated that Srinagar was consciously designated as the seat of arbitration – Once such a designation was made, the legal consequence that inexorably follows is that courts at Srinagar alone would have supervisory jurisdiction over the arbitral proceeding – Mere fact that arbitral tribunal for reasons of convenience, conducted proceeding at New Delhi or rendered the award at that place does not and cannot, alter the juridical seat of arbitration – Approach adopted by the High Court, if upheld, would have the effect of rendering the concept of juridical seat otiose, and would introduce uncertainty in arbitration proceeding by allowing the place of hearing or the place where the award is signed to determine the jurisdiction – Such a consequence would be contrary to principles of party autonomy and legal certainty – Impugned order cannot be sustained – Court at Srinagar being the court of seat of arbitration, alone possesses the jurisdiction to entertain and decide the challenge to the arbitral award – Impugned order quashed and set aside – Proceeding u/s.34 restored. [Paras 19-24]
Arbitration and Conciliation Act, 1996 – s.20 – Principles governing the distinction between the seat and venue of the arbitration, and the jurisdictional consequences: Held: Seat of arbitration constitutes the juridical home or legal place of arbitration – It determines the curial law governing the arbitral process and identifies the Court having supervisory control over the arbitration – Once the seat is designated by agreement of the parties, the courts of that place alone have exclusive jurisdiction to entertain all proceedings arising out of the arbitration, including challenges to the award – Venue is merely a geographical location chosen for convenience for holding hearings, examination of witnesses, or meetings of the arbitral tribunal – It does not confer jurisdiction and does not, by itself, alter or determine the seat – Arbitral tribunal is free to conduct proceedings at locations different from the seat without affecting the juridical seat – Mere fact that arbitral proceedings are conducted or the award is rendered at a particular place does not confer jurisdiction on courts of that place if it is different from the designated seat – Seat remains fixed unless expressly altered by agreement of the parties – Where the seat is not expressly designated, courts determine it by applying the closest and most intimate connection test, identifying the place most closely connected with the arbitration (based on the Naviera Amazonica principle); and in appropriate cases, construing the venue as the seat where the agreement and surrounding circumstances indicate such intention (as reflected in the Shashoua principle) – Intention of the parties, as discerned from the arbitration agreement and surrounding circumstances, is the paramount factor in determining the seat – Once such intention is expressed-either expressly or by necessary implication-it must be given full effect by Courts. [Para 18]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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